Nortech Systems Reports 8% Revenue Decline and Net Loss for Fiscal Year 2024

Nortech Systems Incorporated reported a decline in financial performance for the fiscal year ending December 31, 2024, with net sales totaling $128.1 million, down 8% from $139.3 million in 2023. The decrease in revenue was attributed to reduced sales across all major markets, particularly in the medical device and industrial sectors, which saw declines of 10.6% and 11.5%, respectively. The company's gross profit also fell significantly, dropping to $16.7 million from $23.1 million, resulting in a gross margin percentage of 13.1%, down from 16.6% in the previous year. This decline in profitability culminated in a net loss of $1.3 million, or $0.47 per share, compared to a net income of $6.9 million, or $2.38 per share, in 2023.

Operationally, Nortech experienced a significant reduction in its backlog, with a 24.8% decrease in its 90-day shipment backlog, totaling $26.5 million as of December 31, 2024. The total order backlog also fell by 28.2% to $65.9 million. The company noted that customers were rebalancing their inventories and deferring orders, which contributed to the reduced visibility in net sales for the upcoming quarters. Additionally, the company closed its Blue Earth, Minnesota facility in December 2024, incurring restructuring charges of $571,000 related to this consolidation.

In terms of strategic developments, Nortech has been focusing on expanding its capabilities and footprint in the engineering and manufacturing sectors. The company has maintained its commitment to quality and cost-effectiveness, investing in equipment and training to enhance operational efficiency. As of December 31, 2024, Nortech employed 701 full-time and 43 part-time employees, reflecting a stable workforce despite the operational changes. The company continues to serve a diverse customer base, with over 50% of its net sales derived from medical-related markets.

Looking ahead, Nortech's management expressed cautious optimism, emphasizing the importance of adapting to changing market conditions and customer needs. The company is focused on improving its operational efficiency and exploring strategic opportunities, including potential acquisitions and partnerships, to enhance its competitive position. However, the ongoing challenges in the supply chain and the need for inventory management remain critical factors that could impact future performance. The company has also amended its credit agreement with Bank of America to provide more flexibility in meeting its financial covenants, which will be closely monitored in the coming quarters.